Avon’s alleged crime? A decade ago, when Avon was trying to break into the gigantic Chinese market, staff and consultants at a subsidiary allegedly tried to grease the wheels by handing out gifts to various Chinese officials.

The Securities and Exchange Commission says these gifts included plane tickets, “Louis Vuitton merchandise, Gucci bags (and) Tiffany pens,” as well as corporate box tickets to the China Open tennis tournament.

Gosh. Has human depravity ever sunk so low? Do you hear that: They gave some Chinese officials Tiffany pens!

It’s a lucky thing the SEC and the Justice Department have nothing better to do than to police these things, which took place thousands of miles from U.S. soil, and were conducted in the pursuit of lucrative contracts which could have created American jobs and income.

In total, the SEC found that all these gifts — including, apparently, some cash — added up to the princely sum of $8 million. Yikes!

Avon paid a total of $135 million to include fines, and penalties to avoid civil and criminal charges. This also included handing over to the U.S. government $53 million worth of benefits received by the company as a result of its work breaking into China.

Sorry, but this is a farce. Prosecutions like this simply shouldn’t happen. Morally, if not legally, it’s hard to say Avon Products did anything wrong. And if Avon did do anything wrong, its offense is against the Chinese, not against the U.S.A.

Let me say here that the fault here doesn’t lie with the SEC or the DOJ, which are merely doings their jobs enforcing the law. The problem lies with the Foreign Corrupt Practices Act itself. It’s moronic.

The FCPA was passed in 1977, and was in keeping with the anti-corporate tenor of the times. It was in reaction to an apparent wave of cases where U.S. corporations and executives had been caught bribing overseas officials. As so often in American politics, the result was legislative overkill, and we have gone from one extreme to another—from a situation where anything went, to a situation where pretty much everything is forbidden.

China is a corrupt Communist dictatorship. It has a dismal record on human rights, freedom of speech and freedom of religion. The state’s oil company, Cnooc
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has been implicated in genocide in Sudan. Its labor and environment laws are a joke. Staff at a Chinese factory which made Apple
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iPhones were treated so badly that some of them were jumping off the roof to their death in despair.

Yet there are no sanctions on anybody for doing business with China under these conditions. On the contrary, the U.S. effectively encourages American companies to close down humane U.S. operations and shift the jobs to sweat shops in China, where they do not have to provide workers with health care, medical leave or other treatment, and where they can just dump any toxic waste in the river. Under our system of tariffs and “free” trade, any company that refuses to follow suit will find itself undercut, and put out of business, by its competitors.

And under U.S. law, all of this is OK. But handing out Tiffany pens and Gucci bags to help win a contract — why, that is nothing less than a crime against humanity.

Gifts, donations and bribes

Meanwhile the tsunami of corporate gifts and cash flows through Washington, D.C. itself like a giant wall of money.

According to the Center for Responsive Politics, a nonprofit which tracks money and politics, about $3.7 billion was spent just in this year’s midterm House and Senate elections.

Foreigners look at the money in our political system with horror and amazement.

Avon could have set up a political-action committee and distributed money in great big bags to tame legislators who promised to do the company’s bidding on Capitol Hill. It could have created dozens of lucrative lobbyist jobs paying $300,000 a year and handed them out as rewards to congressional aides who had helped the company out over the years. It could have even set up an anonymous “independent committee” and used it as what amounts to a political protection racket, financing attack ads against any legislator who didn’t do what the company wanted.

Under U.S. law, all of that would be have been A.O.K.

But taking Chinese officials to a tennis tournament? Somebody call the police!

Avon is an American company that is in crisis. The stock has been in free fall for several years. The company is trying to break into the direct-sales cosmetics markets in developing countries around the world. On its success or failure rest plenty of American jobs and income and the wealth of stockholders. And in many overseas countries, you need a little grease to spin the wheels of commerce. Why is that so bad?

Why do we assume that foreign countries, such as China, are incapable of stopping corruption themselves and need Uncle Sam’s assistance — whether they want it or not? If the Chinese are OK with letting officials receive gifts, what is it to us?

And why do we assume our national standards and norms of corporate behavior are the right ones? In many foreign countries, including in Europe and Asia, giving gifts is considered a respectable part of business. In their intolerance of these cultural practices, “Americans are like the Taliban,” observed a friend in London some years ago.

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